Foreign Direct Investment
Flows of foreign direct investment (FDI) recovered to pre-pandemic levels last year, hitting nearly $1.6 trillion but the prospects for this year are grimmer, the latest UNCTAD World Investment Report said. The report entitled "International tax reforms and sustainable investment" said that to cope with an environment of uncertainty and risk aversion, developing countries must get significant help from the international community. Developing Asia, which receives 40% of global FDI, saw flows rise in 2021 for the third straight year to an all-time high of $619 billion. FDI in China grew 21% and in Southeast Asia by 44% but South Asia went the other way, falling 26% as flows to India shrank to $45 billion. "The need for investment in productive capacity, in the Sustainable Development Goals (SDGs) and in climate change mitigation and adaptation is enormous. Current investment trends in these areas are not unanimously positive," said Rebeca Grynspan, Secretary-General of United Nations Conference on Trade and Development (UNCTAD). Read: Padma Bridge to lead to unprecedented improvement in communication system: Kamal "It is important that we act now. Even though countries face very alarming immediate problems stemming from the cost-of-living crisis, it is important we are able to invest in the long term." Coming off a low base in 2020, global FDI flows rose 64 percent to $1.58 trillion last year with momentum from booming merger and acquisition (M&A) activity and rapid growth in international project finance due to loose financing and major infrastructure stimulus packages. Explore UNCTAD’s interactive data visualization on FDI inflows and outflows in countries and regions over the last 30 years. While the recovery benefitted all regions, almost three-quarters of the growth was concentrated in developed economies as FDI flows rose 134% and multinational companies posted record profits. Flows to developing economies rose 30% to $837 billion – the highest level ever recorded – largely due to strength in Asia, a partial recovery in Latin America and the Caribbean and an upswing in Africa. The share of developing countries in global flows remained just above 50%. The reinvested earnings component of FDI – profits retained in foreign affiliates by multinational companies – accounted for the bulk of the global growth, reflecting the record rise in corporate profits, especially in developed economies. The top 10 economies for FDI inflows in 2021 were the United States, China, Hong Kong (China), Singapore, Canada, Brazil, India, South Africa, Russia and Mexico. 2022 Prospects This year, the business and investment climate has changed dramatically as the war in Ukraine results in a triple crisis of high food and fuel prices and tighter financing. Other factors clouding the FDI horizon include renewed pandemic impacts, the likelihood of more interest rate rises in major economies, negative sentiment in financial markets and a potential recession. Read: xBudget FY23: Kamal sees rising inflation as a major challenge Despite high profits, investment by multinational companies in new projects overseas were still one-fifth below pre-pandemic levels last year. For developing countries, the value of greenfield announcements stayed flat. "UNCTAD foresees that the growth momentum of 2021 cannot be sustained and that global FDI flows in 2022 will likely move on a downward trajectory, at best remaining flat," the report underline. "However, even if flows should remain relatively stable in value terms, new project activity is likely to suffer more from investor uncertainty." In 2021, FDI in Latin America and the Caribbean rose 56% – with South America’s growth of 74% sustained by higher demand for commodities and green minerals. For structurally weak, vulnerable and small economies rose by 15% to 39 trillion, however influx to the least developed countries, landlocked and small island developing states combined accounted only for 2.5 percent of the world total in 2021, down from 3.5 percent in 2020. The impact of the pandemic intensified fragility and investment in sectors relevant for the SDGs – especially food, agriculture, health and education – continued to fall. "In 2022, FDI flows to developing economies are expected to be strongly affected by the war in Ukraine and its wider ramifications, and by macroeconomic factors including rising interest rates," the report said. "Fiscal space in many countries will be significantly reduced, especially in oil- and food-importing developing economies." Investing in Sustainable Development Goals After taking a significant hit in the first year of the pandemic, international SDG investment jumped 70% last year. But most of the recovery growth came in renewable energy and energy efficiency, where project values reached more than three times the pre-pandemic level. "While the 2021 recovery in value terms is positive, investment activity in most SDG-related sectors in developing economies, as measured by project numbers, remained below pre-pandemic levels," the report said. Read: Around US$ 4 billion invested in private economic zones : Kamal "Across developing Asia, investment in sectors relevant for the SDGs rose significantly," the report said. "International project finance values in these sectors increased by 74% to $121 billion, primarily because of strong interest in renewable energy." International project finance is increasingly important for Sustainable Development Goals and climate change investment. Some positive steps in these areas in 2021 could be tested this year. Announced international project finance deals hit a record of 1,262 projects last year and more than doubled in value to $656 billion. The introduction of a global minimum tax on foreign direct investment will have important implications for the international investment climate but both developed and developing countries are expected to benefit from an increased revenue collection.
For a sustainable development of plastic sector in post-LDC era, speakers in a webinar have urged to ease duty structure on import of plastic raw materials, modernization of respective policies, encouraging uses of bio-plastic, signing of Free Trade Agreements (FTAs)or Preferential trade arrangements (PTAs) with potential countries. They sought some initiatives for booming plastic business and attracting foreign direct investment (FDI) on priority basis for increasing negotiation skills to protect the domestic market, bringing product diversification, development of plastic waste management system, technological advancement, enhancing accredited world class testing lab facilities, and innovative product designing. Speakers put emphasis on these issues at a webinar on “Sustainable export growth in post-LDC world: strategies for the plastic sector” organized by Dhaka Chamber of Commerce & Industry (DCCI) on Saturday. Principal Secretary to the Prime Minister Dr. Ahmad Kaikaus joined the webinar as the chief guest. DCCI President Rizwan Rahman chaired the event. FBCCI President Md. Jashim Uddin joined as special guest. Also read: Self-reliance in seed production essential for food security: FBCCI Dr. Ahmad Kaikaus said that the existing nexus between the public and private sector is stronger than ever that leads Bangladesh to a new height. In order to identify various prospects and challenges in the plastic sector, he suggested forming a national taskforce combining public and private sector participation. He also urged for a better plastic waste management solution. Rizwan Rahman, in his opening remarks said that the plastic sector witnessed a rapid commercialization and became an important export item of Bangladesh. Export of plastic goods contributes 0.33 percent to the GDP. Around 5,110 companies are operational in the plastic sector and 98 percent of them are SMEs, he mentioned. “To ensure sustainable industrial growth, a draft Plastic Policy was developed by the Government. Since many preferences will not exist in the post-LDC era, FTA and RTAs can be signed with the potential countries,” the DCCI president said. “We need to replicate the RMG success model to other export-led manufacturing sectors as well. Product diversification is essential while changing raw materials to recycled plastic waste as a viable alternative,” he added. Also read: FBCCI to boost business with Mexico Md. Jashim Uddin, President, FBCCI, Shamim Ahmed, President, Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), Dr. Md. Shahidul Islam, NBR Member (Customs), Dr. Ijaz Hossain, retired professor of Chemical Engineering, BUET, among others, spoke in the function.
Two-day International Investment Summit, 2021 will begin at a city hotel on Sunday, aiming to promote Bangladesh as an attractive Foreign Direct Investment (FDI) destination and highlight different opportunities for private investors.The slogan of the summit has been selected as "Bangladesh Discover Limitless Opportunities" marking Mujib Borsho, the birth centenary of Father of the Nation Bangabandhu Sheikh Mujibur Rahman, said Md. Sirajul Islam, executive chairman of Bangladesh Investment Development Authority (BIDA). READ: FBCCI seeks enhanced trade, investment ties with UK Prime Minister Sheikh Hasina with inaugurate the summit virtually while ministers, domestic and foreign delegations, experts in the sector will join physically. All preparations have been completed, Sirajul Islam said. BIDA will organize the summit in association with Bangladesh Economic Zones Authority (Beza), Bangladesh Export Processing Zones Authority (Bepza), Bangladesh Hi-Tech Park Authority (BHTPA), Public Private Partnership Authority (PPPA), Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and Foreign Investors' Chamber Of Commerce and Industry (FICCI).Representatives of the government and investors from different countries, including the USA, the United Kingdom, Japan, South Korea, Singapore, China, Saudi Arabia, United Arab Emirate, India, Turkey, Thailand, Malaysia, and the Netherlands are expected to take part in the summit.Local policymakers, investors and economists will also participate in the summit, the BIDA chairman added. READ: Weeklong trade summit ends with $1.16 bn investment prospect The BIDA chief said there will be a string of sessions where potential of 11 prospective sectors will be thoroughly analyzed by the policymakers and experts. There will be one technical session on the second day, he added.
The Korean Export Processing Zone (KEPZ) Hi-Tech park will play a significant role in attracting Foreign Direct Investment (FDI) to Bangladesh, said State Minister for ICT Division Zunaid Ahmed Palak on Wednesday. "Korea is a pioneer country to invest in Bangladesh and has extended and enhanced its cooperation beyond textile to ICT, energy, blue economy, climate change and infrastructure development for over 45 years," he said. Palak made the remarks at the groundbreaking ceremony of the KEPZ Hi-Tech Park mentioning that the collaboration between Bangladesh and South Korea goes a long way. The Hi-Tech Park was jointly inaugurated by State Minister Zunaid Ahmed Palak and South Korean Ambassador to Bangladesh Lee Jang-keun with the physical presence of Kihak Sung, Chairman & CEO of Youngone Corp & KEPZ. It was a remarkable day for KEPZ in the field of Hi-Tech industrial development, said the Youngone Corp adding that the vision of the company to establish a state-of-the-art Hi-Tech park is coming to a reality. Also read: S Korea sees brighter ties with Bangladesh with multifarious success stories: Envoy
Speakers for tapping potential for FDI in agro processing, light engineering, blue economy, education sectors
Speakers at a webinar on Saturday stressed the need for reforming the taxation system alongside tapping the Foreign Direct Investment (FDI) potentials in a wide range of sectors like agro processing, light engineering, non-cotton apparel, home textile, blue economy and education in Bangladesh to ensure export diversification and smooth LDC graduation. They also suggested extending the scope for whitening undisclosed money in the health infrastructure, economic zones, and in other infrastructure sectors alongside the existing sectors to create more employment opportunities. The participants also opined that all the concerned stakeholders need to extend their all-out cooperation to the Bangladesh Investment Development Authority (BIDA) to attract more FDI in the country. The webinar was organized as part of the Economic Reporters Forum (ERF) Webinar Series in partnership with the Asia Foundation and Research and Policy Integration for Development (RAPID). As the chief guest, Planning Minister MA Mannan spoke at the Webinar titled-“FDI for Export Diversification and Smooth LDC Graduation” while ERF Vice President Shafiqul Alam was chair. Chairman of RAPID and Director of Policy Research Institute (PRI) Dr Mohammad Abdur Razzaque made the key-note presentation and ERF general secretary SM Rashidul Islam moderated the function. MA Mannan said it is a fact that the country does not receive that level of FDI that it needs. “In this regard, all the concerned agencies need to accomplish their tasks in due time to attract more FDI,” he also said, suggesting overcoming the “cultural context” and thus move forward together with modern attitude. Also read: BIDA, BBF join hands to boost FDI BIDA Executive Chairman Md Sirazul Islam said BIDA needs to be empowered fully as it still needs to depend on others to facilitate the private sector. Noting that there is no lacking from BIDA to create enabling environment for attracting more FDI, he added that the Authority has made effective the One Stop Service (OSS) platform to ensure transparent and hassle free service delivery. Sirazul informed that some 47 services have so far been brought under online while the services of some 16 organizations including BIDA have already come under OSS platform. Listing various steps of the BIDA to further ease the doing business index, he informed that separate courts would be lunched in Dhaka and Chattogram to speedily resolve the commercial disputes. “We'll definitely try our best to face the challenges emerging before us. But for that the public and the private sector need to work together,” he said adding that the door of BIDA would always remain open for the private sector. Sirazul also opined that if the local Investment could be promoted further, there would be more FDI inflow. He suggested for providing COVID-19 vaccination facility to the legally employed foreigners in Bangladesh to show that Bangladesh values all lives equally and also to send a good signal to the outside world. Also read: FICCI roundtable upholds importance of FDI to Vision 2041 President of Metropolitan Chamber of Commerce and Industry (MCCI) Barrister Nihad Kabir said the now defunct Board of Investment (BOI) was earlier regarded as the “Dead Stop Service” or ‘Full Stop Service’, but now BIDA has somehow managed to overcome that bad name, but still there is a lot to do. Expressing her resentment over the treatment of the businessmen in the country, Nihad said if the businessmen are not treated with respect in the country, then the foreign investors would not come to a big extent. She said although Bangladesh has an extremely courageous leader to run the country, but others are not moving ahead with the same pace that the Prime Minister has. Nihad also suggested for targeting the potential sectors, adopting a coherent policy strategy by BIDA, signing more Preferential Trade Agreements with potential countries, and thus extending all-out support to BIDA to attract more FDI. The President of Dhaka Chamber of Commerce and Industry (DCCI) Rizwan Rahman underscored the need for reforming the tax rate as it is still high compared to the global and Asian average. He also suggested extending the provision for whitening undisclosed money in the health infrastructure, tourism and in economic zones alongside the real estate and capital market, otherwise there would be bubbles in the economy. Rizwan said that there is much more scope for attracting more FDI in the Blue Economy and education sectors of the country. He said that if the non-RMG sectors could be nurtured properly apart from the RMG sector, then the country would be able to realize billions of dollars of export earnings. Also read: Bangladesh seeks increased FDI in economic zones Citing an example that the Bangladeshi exports earn $1,089 by exporting 1000KGs of tea shirts, whereas the Vietnamese exporters earn $2,157 by exporting the same volume, Syed Nasim Manzur, Managing Director of Apex Footwear Ltd, said “bargaining power’ makes the difference here which needs to be addressed. He said it is the high time to recapture the Japanese Investment from Myanmar to Bangladesh adding, “This is the chance we must not lose,” About the taxation system, the country's leading entrepreneur in the footwear sector alleged that taxation system in the country is totally taxpayer unfriendly adding that new entrepreneurs would not come while the existing businesses would not flourish unless the taxation system is reformed. He also suggested ensuring duty free and quota free access in markets like Japan, EU, India and China by not looking forward only to the market of USA. Manzur cited huge FDI and Investment potentials in the country's agro processed food, light engineering, non-cotton apparel and home textile sectors for which there is a need for necessary tax reforms. In his key-note address, Dr Abdur Razzaque said the tax-GDP ratio needs to be revamped in Bangladesh while FDI can create modern job opportunities and bring in new technology and management practices for Bangladesh. Mentioning that public health expenditure is one of the lowest in Bangladesh, he said this budget needs to be increased while more investment is needed in the education sector. Mentioning that countries like Vietnam and Indonesia are greatly benefitting from FDI, Razzaque said their good practices can be applied in Bangladesh. Executive Director of RAPID and Dhaka University Professor of Development Studies Dr M Abu Yusuf and Country Representative of the Asia Foundation Kazi Faisal Bin Seraj gave the welcome addresses.
Bangladesh Investment Development Authority (BIDA) has joined hands with Better Bangladesh Foundation (BBF) , a non-profit organization, in a bid to attract more foreign direct investment (FDI) into the country.
Foreign Direct Investment, or FDI, remains a critical enabler for Bangladesh to attain its aspirations of becoming a developed country by 2041, as well as to secure positive development outcomes including more and better jobs, and economic diversification.
The vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, helped the emirate lay solid foundations for its emergence as a preferred regional and global investment destination, said H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Dubai Crown Prince and Chairman of The Executive Council of Dubai.
Foreign Minister Dr AK Abdul Momen on Thursday laid emphasis on increasing the foreign direct investment (FDI) into the Economic Zones placing Bangladesh on a higher development trajectory to achieve the dream of ‘Sonar Bangla’.
Although developing countries attracted a record share of global foreign direct investment (FDI) in 2020, finance for infrastructure and productive sectors fell significantly, weakening their COVID-19 recovery prospects.